Morning Read: Stock Indexes Aim For a Bounce, Volatility Bets Retreat

By Brendan Conway

Market check: Index futures recover from Monday’s swoon, with the blue-chip Dow Jones Industrial Average (DIA) looking ready to take back at least part of the first triple-digit loss of 2013. iShares MSCI Spain Index Fund (EWP) rises 1.9% in premarket trading after losing more than 5% on Monday. Volatility trades that worked out well on Monday, such as the leveraged ProShares Ultra VIX Short-Term Futures ETF (UVXY), point sharply lower in the premarket.

Fund watch: Index Universe’s Paul Ameryfills in some of the background on two pension funds’ lawsuit against BlackRock’s (BLK) iShares ETF unit. At issue is what happens to revenues a fund sponsor gains by lending out the securities held by an ETF. About 10% of gross securities lending revenues are taken as a fee when it comes to most large pension plans’ securities lending agents, according to a study cited by the plaintiffs. iShares’ cut is much higher, but it’s been falling swiftly. Index Universe reported last year that iShares retains a 35 percent share in U.S. ETFs, down from a 50-50 split in 2010. Also of note, by way of IU: The firm earned $397 million in securities lending fees in 2011 and $157 million on securities lending fees in the second quarter of 2012 alone, according to the lawsuit.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.